National income is defined as the sum of all income available to the residents of a given country in a given year, regardless of the legal classification of that income.

Though he died in 1946, Keynes still dominated economics at Cambridge in the mid-1960s. It wasn't just that all the leading figures among the faculty, Richard Kahn, Joan Robinson, Brian Reddaway, David Champernowne, Nicholas Kaldor, and James Meade, had been his pupils and/or collaborators. It was the tone of the place. The study of economics, theoretical or empirical, was driven by the desire to improve the conduct of economic policy. This did not mean that pure theory was neglected. Indeed, in those years Robinson was fighting a stirring battle in the realms of high theory with Paul Samuelson and Robert Solow from the Massachusetts Institute of Technology. Nor was Cambridge innocent of the cutting edge of econometric technique. Richard Stone, who, following Keynes's suggestions, had created the first modern national income accounts, was still director of the Department of Applied Economics where much of modern econometrics was pioneered. Nonetheless, we were taught that theory and technique should serve the higher cause of rational economic policies, and to use our newly learned econometric expertise to write essays on unemployment, or inflation, or the balance of trade, or some other topic at the top of the current political agenda.

I am trying to put the distributional question and the study of long-run trends back at the heart of economic analysis. In that sense, I am pursuing a tradition which was pioneered by the economists of the 19th century, including David Ricardo and Karl Marx. One key difference is that I have a lot more historical data. With the help of , , Facundo Alvaredo, Gilles Postel-Vinay, Jean-Laurent Rosenthal, Gabriel Zucman and many other scholars, we have been able to collect a unique set of data covering three centuries and over 20 countries. This is by far the most extensive database available in regard to the historical evolution of income and wealth. This book proposes an interpretative synthesis based upon this collective data collection project.

Thus, critical social indices must be measured regularly and put on the same scale as the economic indices so that the true balance can be revealed. Government, NGOs and the private sector must work together in order to give the needed support for the achievement of appropriate economic and social objectives through the application of appropriate strategies.

In 1800, a prosperous year, the total income of Americans (called ‘the national income’) was something over 2 billion dollars, a fabulous amount then. Capitalists and landlords got 68%, farmers and laborers 32%. In 1930, of tragic memory, near the bottom of ‘the worst depression in history’, the incomes of all Americans amounted to roughly to 75 billion. Of this wage earners (who had increased in number 17%) got 64%+; entrepreneurs, 20%; capitalists and landlords the remaining 16%.

The statistical study presented in the following pages may be best defined as an attempt to construct, on the basis of available statistical materials, a of the United States for 1919 and 1929. One hundred and fifty years ago, when Quesnay first published his famous scheme, his contemporaries and disciples acclaimed it as the greatest discovery since Newton’s laws. The idea of general interdepence among the various part of the economic system has become by now the very foundation of economic analysis. Yet, when it comes to the practical application of this theoretical tool, modern economists must rely exactly as Quesnay did upon fictitious numerical examples.

This book provides a detailed picture of the institutionalist movement in American economics concentrating on the period between the two World Wars. The discussion brings a new emphasis on the leading role of Walton Hamilton in the formation of Institutional economics, on the special importance of the ideals of “science” and “social control” embodied within the movement, on the large and close network of individuals involved, on the educational programs and research organizations created by institutionalists, and on the significant place of the movement within the mainstream of interwar American economics.

Treatment of the capital account separately from the production and income account of the economy is... a first step, a simplification... justified by convenience... The strategy is to regard income account variables as tentatively exogenous... and to find equilibrium in the markets for stocks of assets conditional upon assumed... outputs, incomes, and other flows.

The origin of this research was an attempt to extend Cassel’s system of equations of price determination in one market to that of several trading countries. Although the point of departure is totally different, the results of that attempt (presented in chapter III) exhibit important similarities to Heckscher’s treatment in ‘‘The Effect of Foreign Trade on the Distribution of Income,’’ published one year earlier in Ekonomisk Tidskrift, 1920. There is no doubt that the author was unconsciously influenced by Heckscher’s paper both at this and at later stages of the work. The influence of this pathbreaking paper, both conscious and unconscious, has surely been particularly decisive in the development of the material in chapters I–III.

Clearly, nobody was going to stand in the way of this amazing new technology. But because of the extremely high cost and phenomenal inaccuracy of early computers, the only customer for them was the federal government. In 1890, for the first time, the government used computing machines to conduct the census; it was completed in a record two months, and it yielded much valuable information, including the startling fact that the United States had only twelve residents, all of them named "Earl A. Snepp." As you would expect, when the federal income tax was enacted in 1913, the Internal Revenue Service quickly embraced the computer. The model used by the IRS was a simple yet effective device that employed a bank of electrically charged nails and a series of cardboard cards with various patterns of holes punched in them; when the nails were pressed down onto a card, they passed through the holes and formed a complete electrical circuit by piercing the naked bodies of taxpayers who had been summoned for audits.

There is no doubt that our grievances against the British Empire had a sound basis for. As the painstaking statistical work of the Cambridge historian Angus Maddison has shown, India's share of world income collapsed from 22.6% in 1700, almost equal to Europe's share of 23.3% at that time, to as low as 3.8% in 1952. Indeed, at the beginning of the 20th Century, "the brightest jewel in the British Crown" was the poorest country in the world in terms of per capita income.

Of the proportion, which the product of any region bears to the people, an estimate is commonly made according to the pecuniary price of the necessities of life; which is never certain, because it supposes what is far from truth, that the value of money is always the same, and so measures an unknown quantity by an uncertain standard. It is competent enough when the markets of the same country, at different times, and those times not too distant, are to be compared; but of very little use for the purpose of making one nation acquainted with the state of another.

The purpose of income calculations in practical affairs is to give people an indication of the amount which they can consume without impoverishing themselves. Following out this idea, it would seem that we ought to define a man's income as the maximum value which he can consume during a week, and still expect to be as well off at the end of the week as he was at the beginning.

There was a plea from honourable Members relating to the need for formal Gross National Product figures. Such figures are very inexact even in the most sophisticated countries I think they do not have a great deal of meaning, even as a basis of comparison between economies. That other countries make use of them is not, I think, necessarily a good reason to suppose that we need them. But, although I am not entirely clear what practical purpose they would serve in Hong Kong, I am sure they would be of interest. I suspect myself, however, that the need arises in other countries because high taxation and more or less detailed Government intervention in the economy have made it essential to be able to judge (or to hope to be able to judge) the effect of policies, and of changes in policies, on the economy. One of the honourable Members who spoke on this subject, said outright, as a confirmed planner, that he thought that they were desirable for the planning of our future economic policy. But we are in the happy position, happier at least for the Financial Secretary where the leverage exercised by Government on the economy is so small that it is not necessary, nor even of any particular value, to have these figures available for the formulation of policy. We might indeed be right to be apprehensive lest the availability of such figures might lead, by a reversal of cause and effect, to policies designed to have a direct effect on the economy. I would myself deplore this.